The bulls have 7 more trading days to pad their gains, or give them back, and with fund managers getting itchy trigger fingers it will be interesting to see if they lock-in gains or let them ride. Most fund managers have to rebalance their portfolios by the end of October and they will need to show some winners. This could be some of the selling pressure we have seen this week in the momentum names.
There are a ton of stories to talk about but one stock gone unnoticed by the Wall Street pros until now is Safeway (SWY, $35.78, up $2.88). It seems there are several private equity firms that are exploring deals for all or part of the company. Shares opened at $35.56 after closing jus south of $33 yesterday and have traded to a high of $36.75 today.
We got our subscribers into an option trade at the beginning of the month when shares were under $32 as the technical picture was pointing towards a breakout. We also did our homework and said the company would beat earnings estimates when they announced their numbers 2 weeks ago. Shares made a run at $34 and where we locked-in a quarter of the trade for nearly a 40% profit. We wanted to keep the rest of the trade open as we said a run to $36 could come. Today’s news makes us look like a Guinness beer – brilliant! We locked-in another half of the trade and we will keep a quarter position open to play a possible push to $38 but we may have seen a short-term top with today’s 10% pop to a new 52-week peak.
We said this would be a stock picker’s market going forward and despite today’s pullback, we continue to ring the register as we wind down an incredible October. The suit-and-ties are out in droves today calling for a continued pullback but from our view, the market could still see higher prices before there is a significant pullback.
The Dow is currently down 86 points to 15,381 while the S&P 500 is lower by 11 points to 1,742. The Nasdaq is off 34 points to 3,895 and the Russell 2000 is declining 5 points to 1,110. The VIX is at 13.94, up 5%. We mentioned the small-caps had 1% of wiggle room before we take the bears seriously and the VIX is still below 15.
We have 3 more Profit Alerts today as we closed the other half of our General Electric (GE, $25.67, down $0.35) call option trade for a 136% win. We are also closing HALF of our H&R Block (HRB, $28.96, down $0.44) trade for a 78% return and we are ringing the register on our TriQuint Semiconductor (TQNT, $8.44, down $0.50) call trade for a decent double-digit win despite today’s pullback.
Subscribers, check the Members Area for the updates and stay locked-and-loaded as we could have a new trade before the close.
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